Shares of Confluent, Inc. (CFLT) experienced a significant 24-hour plunge of 25.42% on Wednesday, despite reporting better-than-expected second-quarter 2025 financial results. The sharp decline was primarily driven by the company's disappointing outlook for the third quarter, which fell short of investor expectations.

For Q2, Confluent reported adjusted earnings per share of $0.09, surpassing the analyst estimate of $0.08. Revenue came in at $282.3 million, beating the expected $278.4 million. However, the company's guidance for Q3 raised concerns among investors. Confluent projects Q3 adjusted EPS between $0.09 and $0.10, which is at the lower end of analyst expectations of $0.10. Additionally, the outlook for Q3 subscription revenue of $281-$282 million and the full-year subscription revenue forecast of $1.105-$1.11 billion were perceived as conservative by the market.

The substantial stock sell-off reflects investors' disappointment with Confluent's cautious outlook, despite its strong Q2 performance. This reaction highlights the market's sensitivity to forward-looking guidance, especially in the current economic climate where growth expectations are closely scrutinized. The significant drop in Confluent's share price suggests that investors are recalibrating their expectations for the company's near-term growth prospects.